PPL Perspectives

'Turn and face the strange, ch-ch-changes' – How can councils make the most out of their shrinking budgets?

14 December 2018

Evan Galbraith, On Purpose Associate

As the old adage goes, ‘When life gives you lemons, make lemonade’. That said, have you ever tried to make lemonade? There are several steps to take and other ingredients to add before you have a tasty beverage. There is also a lot of trial-and-error involved, and you will probably go through a few iterations and taste-tests before it is drinkable.

The United Nations Special Rapporteur, Professor Philip Alston, recently released a report on poverty in the UK. His findings suggest the government is giving out a lot of lemons – in the form of funding cuts – and not much else.

The report is largely critical of a shift in government ethos towards austerity and its accompanying policies since 2010. Professor Alston argues that this is behind the UK’s increasing rates and severity of poverty. It is well publicised that there have been dramatic reductions in the money transferred from central government to local councils, and that this has dramatically impacted local services . Alston’s report reiterates this. One of the report’s many observations is that local councils are increasingly being handed lemons (see: dramatic funding cuts) in the place of more versatile ingredients. This switch in ingredients and accompanying mandate to make lemonade (see: providing services) is being made without any accompanying materials or a recipe on how to do so.

His conclusions are consistent with the conversations we at PPL are having with local officers. Councils cannot help but talk about their shrinking budgets in conversations about commissioning, service delivery, and outcomes, as they strive to deliver more for less.

Councils have been forced to make dramatic decisions rapidly and without a roadmap setting out where changes will lead them. Different councils have approached these challenges differently. While each is working in its own specific circumstances, in examining those that have adapted to austerity effectively and those who have not there appear to be instructions we can draw out for making (palatable) lemonade.

Seek value, not just savings

Some councils have attempted to find savings solely through whole scale outsourcing services based on the belief that the market will deliver for less cost. While the private and voluntary sectors are capable of savings delivery, such a single-minded approach fails to take into account the fact that government still has a major role in defining and achieving ‘value’. It is the councils that have sought to reduce staff from 3,200 to 320, or outsource 95% of staff, who have run into the most severe financial challenges, and simultaneously faced insolvency and service delivery issues.

Instead, councils must seek value by focusing on outcomes and tailoring delivery and funding around those outcomes. Under austerity this will still certainly mean difficult decisions and likely reduced services. However, it also means a recognition that local government is an essential thread in the fabric of society, and that a call for outcomes – and not just costs savings – must be at the forefront of those difficult decisions.

Define your local vision

It is easy for an underfunded and struggling council to get caught fire-fighting. Councils now viewed as exemplary are those that have adapted to austerity while creating their own separate, local ethos. A vision means a systematic approach, underpinned by outcomes, and not bound by past ways of doing things.

In Lancashire, the ‘Preston Model’ has focused on spending locally for services and promoting cooperatives, and weaving these into the local education system. Once struggling, Preston has since improved its relative levels of deprivation and in 2016 was voted the best city in North-West England to live and work. This came only after they set a vision to form the basis for a strategy to achieve value.

Find the capacity

Reduced budgets have meant capacity is stretched very thinly. A local vision, however, requires time and resources to be diverted towards it. Find the time. Find the budget. Find the partners. It seems counter-intuitive to the default mentality austerity creates, but capacity must be balanced between the reaction to shrinking budgets, the provision of services, and building your local vision.

Grow your capabilities

Providing value and a vision also relies on capabilities. Identify where you want or need to improve to realise your goals. In doing so, it’s okay to ask for help. Other councils are also struggling to simultaneously adapt, try new approaches, and upskill.

Asking for an outside perspective can help you identify where you are now, where you want to be, what others have tried, and any gaps that exist. From there, you can identify what additional skills or changes in culture will be helpful to create the ‘made in X approach’ or ‘Y model’ and realise your vision.

Philip Alston’s report shone a light on the challenging conditions many people are currently facing in the UK, and called on government to make changes. In noting these challenges and changes, it is important to remember that not all governments are the same. Local government have been making dramatic changes to keep up with reduced budgets and devolved responsibilities from central government. Some have been more successful than others. When handed bitter funding cuts, those councils who have sought value over savings, defined a local vision, found capacity, and built capabilities have come through austerity with a recipe for lemonade.

Of course, the UN Report is also a warning that councils, and the entire UK population, can only survive on a lemonade diet for so long. It is only a short-term fix and lacks the nutrients for long-term health. A more sustainable solution requires a change to the way we fund local government. This is something central government can choose to address in the 2019 Spending Review. Perhaps Philip Alston’s report will inspire them to do that.